July 21, 2015

By e-mail: e-ORI@DOL.gov and e-OED@DOL.gov

Office of Regulations and Interpretations

Office of Exemption Determinations

Employee Benefits Security Administration

U.S. Department of Labor

200 Constitution Ave., NW

Washington, DC 20210

Re: Definition of the Term “Fiduciary” (RIN 1210-AB32); Best Interest

Contract Exemption (ZRIN 1210-ZA25), Amendment of PTE 84-24 ( ZRIN

1210-ZA25), Amendment of PTE 77-4 ( ZRIN 1210-ZA25)

Ladies and Gentlemen:

Founded in 1979, Makovsky is one of the world's leading independent communications 

consultancies, building businesses and reputations with ideas that cross the boundaries of 

traditional, digital, social and experiential media. The firm is headquartered in New York City with 

an office in Washington, D.C., and we have 52 employees, approximately 40% of whom are invested 

in the retirement market. In our 36-year existence, we have deep expertise in advising financial 

services firms, ranging from mutual fund companies, to private equity firms, to custodians and 

associations. 

Makovsky appreciates the opportunity to comment on the U.S. Department of Labor’s (“DOL” or 

the “Department”) regulatory package published on April 20, 2015 expanding the definition of 

fiduciary investment advice and proposing new or amended prohibited transaction class 

exemptions. Specifically, we offer comments on the proposed regulation (the “Proposal”) redefining 

the term “fiduciary” with respect to the provision of investment advice under ERISA §3(21)(A)(ii),1 

the proposed prohibited transaction class exemption “Best Interest Contract Exemption” (“BICE”),2 

the proposed amendment to prohibited transaction class exemption 84-24 (“PTE 84-24”),3 and the 

proposed amendment to prohibited transaction class exemption 77-4 (“PTE 77-4”).4

1 80 Fed. Reg. 21,928 (Apr. 20, 2015)

2 Id at 21,960.

3 Id at 22,010.

4 Id at 22,035.
Office of Regulations and Interpretations

Office of Exemption Determinations

Employee Benefits Security Administration

July 21, 2015

Page 2

Makovsky shares the Department’s goal of ensuring ERISA plans, ERISA plan participants and

beneficiaries, and Individual Retirement Account (“IRA”) owners receive quality financial advice. Indeed, 

one of our firm’s primary benefits is access to retirement plans, a responsibility we take very seriously.

As the number of Americans reaching retirement age reaches an estimated 10,000 persons daily, it is 

vitally important that our private retirement system, from employer-provided plans to IRAs, protect the 

interests of employees and their families, and provide them the means to retire with the dignity that 

comes with financial security.

However, the Department has taken an approach that is so exceptionally complicated that we fear it will 

create disincentives to providing the very financial advice it seeks to protect. As a small business owner, 

I can tell say that I look at every dollar that gets spent to support this business that generates more 

$11.5 million in revenue. 

There are at least five primary reasons that we believe the proposed rule needs to be rethought and 

revised: 

 The Proposal Discriminates Against Small Businesses and Individuals

o Individual workers, sole proprietors and IRA owners would be subject to the full costs 

and restrictions of the rule. They would be denied the choice in what kind of financial 

advisors they work with, while giving large business retirement plans the choice to 

comply with the new rules or not. Small businesses, and low and middle income 

Americans, need the most help in saving for retirement, but this rule only allows big 

businesses to have a full range of choices and options.

 The One-Size-Fits-All Rule Actually Prohibits Advisors from Acting in Your Best Interest in 

Some Cases; and Limits Access to Innovation. 

o The Proposal makes it harder for participants and IRA owners to get investment 

education information, to get assistance in rolling over their previous employer plans 

into their new employer plans, and to get advice about investments not on the 

“approved” list of asset types and classes. The Proposal prevents advisors from 

discussing certain investments and options even when they might be in your best 

interest.

 The Best Interest Contract Exemption (“BICE”) Mechanism is Impractical and Stifles 

Participation in Innovation

o Leaving legal reservations aside, there is no clear mechanism for the Department to 

update the “approved list” of investments. As our advisory work has often shown, new 

investment products can be sources of lower costs and potentially higher investment 

returns. How does the next great idea get on the Department’s list? How and how often 

will the list be updated? Without a mechanism and a clear format for doing just that, 

millions of America’s retirement investors could be frozen out of the great ideas. 

o Speaking with all due respect and with from decades of experience with financial 

entrepreneurs, inventors don’t wait to get on a list. They seek to fill unmet needs as fast 

as they can. In its current form, there is no mechanism in the current proposed rule for 

them to do just that. That flaw must be addressed for this proposal to work.

o Instead, we urge a principles based approach that’s used by other regulators.
Office of Regulations and Interpretations

Office of Exemption Determinations

Employee Benefits Security Administration

July 21, 2015

Page 3

 The Proposal Increases Costs and Reduces Access to Advice for Workers

o By significantly increasing the legal and financial risks facing advisors, the effect of the 

Proposal will be to make investment advice and education more expensive, less readily 

available, and more generic, even as workers and retirees need more affordable, more 

accessible and more specific advice and education.

o This in particular makes the proposal not only onerous for small businesses, it is makes 

economically unattractive to provide what should be a benefit to employees.

 The Labor Department Should Not Be the Primary Regulator for Financial Advice

o The introjection of the Department of Labor into regulations that supersede the

financial regulations developed over decades by Congress, the SEC, FINRA, State 

securities regulators, the State Insurance Commissioners, and Federal and State banking 

regulators, is simply confusing. 

o As the Department tries to replace their decades of coordinated experience and longstanding policies with a new, untested, one-size-fits-all Federal regulation that tells 

people what kind of retirement advisor they may have. The lack of a coordinated 

approach will leave workers, investors and retirees with diverging standards that create 

more confusion. A better approach would be to have all interested regulators work 

together to avoid these unintended consequences.

o As our firm looks to provide current and future retirement benefits, from how many 

consultants covering how many regulators will we need advice? 

We appreciate your time and attention in ensuring that retirement investors are provided with the 

broadest array of investment options, while taking all reasonable measures to avoid conflicted advice. 

Respectfully submitted, 

Kenneth D. Makovsky

President and Chief Executive Officer